A Venezuelan oil block being studied by Petroleos de Venezuela SA, or PdVSA, and Spain's Repsol YPF SA has up to 6 billion barrels of recoverable reserves, and production at the site could begin by 2012, Venezuelan officials said Wednesday.

"This is going to be a big project," Venezuelan President Hugo Chavez said after a ceremony in Caracas in which several agreements between the Spanish and Venezuelan energy companies were signed.

The so-called Junin 7 block, Chavez said, will be developed by a joint Venezuelan-Spanish company, and it will produce up to 200,000 barrels of crude a day. It will require upgrading facilities to improve the tar-like crude, he added.

PdVSA and Repsol agreed to start working together on Junin 7, located in the Orinoco oil belt in eastern Venezuela, in 2005. The Orinoco area is considered to be one of the main reserves of heavy and extra heavy crude in the world.

Venezuelan Oil Minister Rafael Ramirez said the studies on Junin 7 could be finished this year. Once the joint-venture company is approved sometime next year, production could begin two years after that, he said.

Also Wednesday, Repsol agreed to sell to PdVSA for $85 million its remaining shares in the Venezuelan power plant Termobarranca as part of Venezuela's move to nationalize many energy industries.

PdVSA also bought for $100 million Repsol's gas-drilling rights in Barranca.

Venezuela's bilateral agreements with Spain add to a bevy of bilateral energy deals it made with Russia and Japan earlier this week.